As in many states, some Illinois families are still struggling in the wake of the Great Recession. A new policy brief from the Annie E. Casey Foundation shows wide gaps in savings between white families and families of color.
It says even a small federal investment in universal children's savings accounts could lead to big long-term benefits. Beadsie Woo, senior associate with the Casey Foundation, also suggests making the federal "My Retirement Account" program more accessible, to set more families up for future success.
"We see that those families are more self-sufficient because they have their own savings to draw on," says Woo. "Over time, the number of people enrolled in benefits decline."
Woo says the research shows the racial wealth gap is growing, and puts children of color at a huge disadvantage. From 2010 to 2013, the brief says white families saw their net worth increase by two percent, while black and Latino families saw drops of 34 and 15 percent, respectively.
Illinois has already taken some steps, such as getting rid of the savings limits for people in the Temporary Assistance to Needy Families program. Woo says other areas to work on include curbing interest rates on payday loans.
The Corporation for Enterprise Development says Illinois has some of the highest interest rates in the country for these short-term loans. Woo says nationally, payday lenders cost low-income families more than $8 billion a year.
"The typical amount borrowed from a payday lender is about $500," she says. "It is, in lots of ways, a very thin margin between what can keep a family from going into debt and being stable."
Other recommendations in the brief include increasing access to home ownership through HUD's Family Self-Sufficiency program.